Economic Boost: WPI Inflation at Lowest Point in 24 months

The Wholesale Price Index( WPI) inflation fell to a nearly two-year low in December, according to data released by the government. The WPI, which measures the rate of change in the price of goods at the noncommercial position, dropped to 1.55% in December from 2.76% in November. This is the lowest position of WPI inflation since January 2019, when it stood at 1.49%.

One of the main factors contributing to the decline in WPI affectation is the fall in energy and power prices. The WPI for fuel and power fell by 3.8% in December, compared to a decline of 0.7% in November. This is the steepest fall in energy and power prices in over two years, and it has significantly pulled down the overall WPI inflation rate. also, the WPI for cultivated products also fell by 0.1% in December, compared to a growth of 0.2% in November, which further counted on the WPI inflation rate.  

The fall in WPI inflation is also harmonious with the decline in the Consumer Price Index( CPI) inflation, which measures the rate of change in the price of goods and services at the retail level. CPI inflation fell to 4.59% in December from 5.54% in November, marking the lowest position of inflation in over two years. This decline in inflation is being attributed to a fall in food prices, as well as a decline in fuel prices, which has led to a decline in transport costs. 

The fall in inflation is good news for the Indian economy, as it gives the Reserve Bank of India( RBI)  further room to cut interest rates to boost profitable growth. The RBI has formerly cut interest rates by 135 basis points since February 2019, but with inflation remaining fairly high, it has been unfit to cut rates further. With inflation now falling, the RBI may consider cutting interest rates further to support profitable growth.

Moreover, the fall in WPI and CPI inflation will also give some relief to consumers, who have been facing rising prices for several months. The decline in inflation will lead to a reduction in the cost of living and allow consumers to have further disposable income to spend on other goods and services.

In conclusion, the fall in WPI inflation to a nearly two-year low in December is a positive development for the Indian economy. The decline in inflation will give the Reserve Bank of India with further room to cut interest rates and support profitable growth. Also, it’ll give relief to consumers who have been facing rising prices for several months, allowing them to have further disposable income to spend on other goods and services.